V-Dem Data Users’ Working Paper Series

Varieties of Democracy (V-Dem) would like to encourage users downloading the data to submit first versions of papers, for online publication by the V-Dem Institute as “V-Dem Data Users’ Working Paper Series”.

Why?

- We think of it as a helpful collective action to gather many papers using V-Dem data in one place for easy access.

- We also think it is a nice way to recognize the service on over 50 people over several years that created this dataset.

Please submit your paper by email to natalia.stepanova@v-dem.net

Template for the Working Paper format could be found here  Working Paper Template.docx (115.1 KB) .

V-Dem Users' Working Papers

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Correlation of Democracy Indicators and Markets Returns 

Authors: Scott Axelrod, James Leitner

University of Gothenburg, Varieties of Democracy Institute: Users' Working Paper No. 4. December 2016

You may download it by clicking on the icon to the left.

We perform various experiments correlating past changes of social indicators about a country with future stock market returns for that country. The 169 social indicators we use, which go back as far as the year 1900, are available from the Varieties of Democracy Project. We use two sets of data for country-wide stock market returns: data compiled by Dimson, Marsh, and Staunton covers 17 countries going back to 1900, and data from the MSCI data analytics and index service covering 45 countries going back as far as 1970. We consider five and ten year time windows. This gives us four different “studies”: MSCI 10 year, DMS 10 year, MSCI 5 year, and DMS 5 year.

We find the striking result that good changes of the social indicators have a positive mean (averaged over studies) total correlation (correlation of change vectors indexed by country-year pairs) with future stock market returns in 157 out of 158 cases in which the indicator measures something good or bad for society. We obtain a result almost as strong when the correlation is aggregated differently using the separate country and year groupings. We perform statistical hypothesis testing to show that, even though the social indicators are not all independent, these result are exceedingly unlikely to be the result of random (white noise) stock market returns.

We also perform “positive linear regression” of stock market return on all 158 indicators, which means that the sign of the regression coefficient for an indicator is constrained to be positive or negative according to whether a positive change of the indicator is good or bad. The fraction of data explained by positive regression is shown to be extremely statistical significant. We calculate a confidence interval for the percentage of data genuinely explained by regression, not just by fitting to noise. The lower end of the confidence window for the four studies is 11%, 14%, 6%, and 9%.

We include a long appendix on the statistical theory of correlation and (unconstrained) regression. This provides background to the novel applications of hypothesis testing and confidence interval calculation in the body of the paper. 

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Nonviolent Resistance and the Quality of Democracy 

Authors: Felix S. Bethke, Jonathan Pinckney 

University of Gothenburg, Varieties of Democracy Institute: Users Working Paper No. 3. July 2016

You may download it by clicking on the icon to the left.

Previous research has shown that successful nonviolent resistance (NVR) campaigns are more likely to promote the growth of democratic political systems compared to violent revolutions. The decentralized organizational structure and pluralistic practices of nonviolent campaigns serve as a template for future political arrangements during and after the initial democratic transition. However, research to date has not disaggregated this finding to address the mechanisms and pathways that produce these effects on democratic quality. In this paper we address this gap by analyzing the effect of NVR on the quality of democracy for a sample of 101 regimes between 1945 and 2010, using an index of polyarchy and its sub-components: (1) elected executive, (2) free and fair elections, (3) freedom of expression, (4) associational autonomy, and (5) inclusive citizenship. Using local linear matching and differences-in- differences estimation, we find that initiating a democratic transition through NVR improves democratic quality after transition significantly and substantially relative to cases without this characteristic. Our analysis of the sub-components of polyarchy reveals that this positive effect comes about primarily due to improvements in freedom of expression, with no significant difference along the other dimensions of polyarchy.  

Winner of V-Dem Best Student Paper Award 2016

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Democracy and State Capacity Revisited: An Investigation of Democracy’s Consequences for State Capacity 

Author: Lasse Egendal Leipziger 

University of Gothenburg, Varieties of Democracy Institute: Users Working Paper No. 1. June 2016

You may download it by clicking on the icon to the left.

Does democracy foster increased state capacity? An answer to this question has crucial implications for many countries that have democratized during the Third Wave of Democratization but demonstrate serious shortcomings in terms of state capacity. In this paper, I critically examine existing theoretical work on the topic, in particular the notion of J-shaped relationship, and subsequently develop three causal pathways through which democracy might enhance the administrative capacity of the state. Two hypotheses are derived expecting a) that a country’s level of democracy affects its administrative capacity, and b) that the duration of the democratic regime affects its administrative capacity. The hypotheses are subjected to empirical assessment trough a statistical, time-series cross-sectional analysis of 122 countries during the third wave. For this purpose, I use V-Dem data1 which is arguably better suited for the empirical assessment compared to existing indicators. The results from the empirical evaluation suggest that the contemporary level of democracy has no robust impact whereas the extent of experience with democracy appears to have a positive and substantively interesting effect. I conclude that democracy does advance state administrative capacity, but only when considered as a cumulative, historical phenomenon. 

Honorary Mention of V-Dem Best Student Paper Award 2016

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Democracies in Crisis: How Do Levels of Democracy Affect Economic Outcomes in Crises of the Developing World? 

Author: Dash Holland 

University of Gothenburg, Varieties of Democracy Institute: Users Working Paper No. 2. June 2016

You may download it by clicking on the icon to the left.

This paper estimates how levels and changes of democracy affect economic outcomes around economic crises, using yearly data from the Varieties of Democracy project. I observe the different impacts on factors like the debt-to-GDP ratio, GDP growth, and the exchange rate to the US dollar. While my model finds statistically significant results for many of these factors, the overall impact of democracy is found to be small and appears to be specific to certain regions or specific economic crises rather than having a generalizable trend. I also discuss possible limitations to my findings. 

 

Disclaimer

V-Dem does not do quality control and therefore does not endorse the content of the papers, which is the responsibility of the authors only.